Summary of the Conference Call for LITONG Technology Company Overview - **Company**: LITONG Technology - **Industry**: Engineering machinery, hydraulic business, high-pressure sterilization equipment, oil and gas extraction Key Points and Arguments 1. **Stable Growth in Hydraulic Business**: LITONG Technology's hydraulic business in engineering machinery has shown stable growth, with the acid fracturing hose project achieving a gross margin close to 40% due to increased market demand from China's shale oil and gas extraction efforts [2][4][6]. 2. **Expansion into HPP Equipment**: The company has successfully developed ultra-high pressure sterilization equipment (HPP) that operates at room temperature, preserving the original flavor and nutrients of food, indicating significant potential for import substitution [2][3][10]. 3. **Recognition by Major Suppliers**: LITONG Technology has been included in the first-level supplier system of China National Petroleum Corporation (CNPC), which reflects the recognition of its product quality and technology [2][4][6]. 4. **Significant Revenue Growth**: In Q1 2025, LITONG Technology reported a revenue increase of 23.14% year-on-year and a net profit growth of 86.13%, indicating substantial progress across multiple business areas [2][8][20]. 5. **New Product Development in Oil Extraction**: The company has launched ultra-length acid pressure pipe assemblies suitable for offshore oil field fracturing vessels and is actively developing cross-border hoses for marine oil [2][9][21]. 6. **Certification and Competitive Advantages**: LITONG's acid pressure hoses have received API and APS certifications, showcasing lightweight, high-temperature resistance, and high corrosion resistance, with a working pressure of up to 15,000 Pa, outperforming competitors [2][11][20]. 7. **Market Potential for HPP Equipment**: The global market for HPP equipment is projected to reach hundreds of billions, with the domestic market currently around a hundred units, positioning LITONG as one of the few companies capable of fully producing HPP equipment [3][22][26]. 8. **Future Development Directions**: The company plans to continue developing HPP technology, expand its existing rubber hose business, and deepen its involvement in shale oil and gas acid fracturing hose markets to meet growing domestic and international demand [7][21][27]. Additional Important Content 1. **Diverse Applications of HPP Technology**: HPP technology is widely applicable in food and beverage, pharmaceuticals, cosmetics, and pet food industries, with significant advantages in extending shelf life and preserving nutritional value [12][23][24]. 2. **Global HPP Market Dynamics**: North America dominates the global HPP market, while China is emerging rapidly, with a compound annual growth rate of nearly 15%, indicating a strong growth trajectory for LITONG Technology in this sector [26][27]. 3. **Competitive Landscape**: LITONG Technology's products are competitive against international brands, with superior performance metrics, and the company has established partnerships with major clients in the industry [14][20]. This summary encapsulates the key insights from the conference call, highlighting LITONG Technology's growth, product development, market positioning, and future strategies in the engineering machinery and high-pressure sterilization equipment sectors.

Industry Overview - Rubber hoses are tubular rubber products used for transporting gases, liquids, slurries, or granular materials. The structure typically consists of an inner rubber layer, a reinforcement layer, and an outer rubber layer [1][2][5] - The demand for rubber hoses has been increasing across various sectors, particularly in automotive, aerospace, petrochemical, and construction industries, driven by the acceleration of industrialization in the country [1][7] - China's annual production capacity for rubber hoses has shown a steady upward trend, with production expected to reach approximately 1.86 billion standard meters in 2024, up from 1.4 billion standard meters in 2014 [1][7] Production Sector - The production of rubber hoses is essential for providing stable solutions for liquid and gas transportation in complex environments. The industry has seen a consistent increase in demand due to industrial growth [7] - The upstream supply chain includes raw materials such as natural rubber, synthetic rubber, rubber additives, and metal components, while the midstream involves manufacturing processes [5][7] Import and Export - China's rubber hose products have reached or are close to developed country standards, leading to a significant increase in export volumes, which have outpaced imports. In 2024, the export volume is projected to be 361,800 tons, reflecting a year-on-year increase of 15.87% [9] - The import volume for the same year is expected to be 26,300 tons, showing a decrease of 6.7% compared to the previous year [9] Consumption Sector - The global industrial hose market is expanding, with the market size projected to grow from $12.8 billion in 2019 to $17 billion in 2024, indicating a broad market space for the rubber hose industry [11] - The demand for hydraulic fracturing water treatment system hoses is also on the rise, with the market size expected to grow from $0.69 million in 2022 to $1.29 million in 2024, and potentially reaching $4.53 million by 2028 [13] Competitive Landscape - The rubber hose industry in China is characterized by a large number of small to medium-sized enterprises, with many competing in the low-end product market. There is a noticeable gap in technology and brand recognition compared to leading multinational companies [15][21] - Major international brands like Manuli, Parker, and Gates dominate the global market, leveraging their extensive experience and technological advantages [15][17] Future Trends - The industry is expected to see an increase in concentration, with smaller companies being phased out due to rising quality demands from downstream sectors [21] - There is a growing trend towards domestic production of high-end rubber hoses, as local companies invest in technology and innovation to reduce reliance on imports [22] - Environmental concerns are driving the industry towards greener and low-carbon production methods, with advancements in automation and digitalization enhancing production efficiency and product quality [23]

Group 1: Strategic Considerations for HPP Equipment - The company aims to extend its industrial chain and upgrade product structure by moving from rubber hose production to high-pressure sterilization (HPP) equipment, enhancing overall competitiveness [5] - The vision of "making fluid technology benefit billions" aligns with the market trend towards green and healthy food, making HPP technology a timely response to consumer demands [5] - Leveraging its geographical advantage in Henan, a major food industry province, the company can effectively connect with local food enterprises, facilitating product application and market feedback [5] Group 2: Applications of HPP Equipment - Beyond juice, the company is exploring HPP applications in various food categories, including: - Alcohol improvement for craft beer and liquor [6] - Sterilization of marinated products like chicken feet and bacon [6] - Treatment of noodle products such as hot dry noodles [6] - Processing of pet food ingredients [6] - Seafood processing, including thawing and sterilization of sea cucumbers [6] - Production of specialty foods like soft-boiled eggs [6] Group 3: Business Model and Market Expansion - The company is diversifying its business model for HPP equipment, including: - Cooperative processing to enhance market penetration [7] - Leasing options to lower customer procurement barriers [7] - Market expansion is supported by application research, providing comprehensive solutions for food sterilization and processing [7] Group 4: Developments in Rubber Hose Business - The fluid segment, centered on rubber hoses, is focusing on three new product developments: - Domestic production of nuclear power hoses, with performance testing completed [8] - Data center liquid cooling hoses, with ongoing customer negotiations [8] - Marine oil crossover hoses, with production line design completed and equipment installation underway [8] Group 5: Polymer Materials Strategy - Polymer materials are a core component of the company's strategy, with a production capacity of 25,000 tons per year to supply various downstream products [9] - The company is enhancing its R&D capabilities in Qingdao, focusing on specialized polymer materials and their applications [9] - Future efforts will target specific areas such as general and specialty mixing rubber, modified nylon materials, and composite materials [9]